Unlike Mining, Fishing and Woodcutting, which are gathering skills, Smithing is a production skill. It takes raw materials obtained from a gathering skill, in this case mining, and makes something else. It is popular because it can make a profit, and lets you provide equipment for you and your friends.

Smithing has two distinct parts: smelting, which is taking the ores from mining and turning them into metal bars, and forging, which is taking those bars and turning them into metal items.